Dubai's flagship airline Emirates is looking at taking over unprofitable neighbor Etihad, according to four people familiar with the matter, in a move that would create the world's biggest carrier by passenger traffic.

The talks, which are at a preliminary stage, would see Emirates acquire the main airline business of Abu Dhabi's Etihad, which would keep its maintenance arm, according to the people, who asked not to be named because the matter is confidential. The negotiations could yet fall through, they said.